CANADA’s federal regulator is considering changes to guidelines for prudential limits and restrictions and capital adequacy for reinsurers.
In a new regulatory framework discussion paper released in June, the Office of the Superintendent of Financial Institutions said it believes risks associated with large exposures and concentration of reinsurance counter-parties must be better managed.
And it also says adjustments to the capital framework for reinsurance are needed.
The paper is part of a broad, three-phase review of the reinsurance framework for federally regulated insurers. The last comprehensive review happened nearly a decade ago.
“Since that time, the insurance environment and reinsurance practices have changed significantly,” OSFI said.
“This review was initiated to deepen our understanding of the broader reinsurance practices being used in both the p&c and life insurance sectors, and determine whether OSFI’s current reinsurance framework remains appropriate and effective.”
The regulator is seeking comments on the discussion paper by Sept. 15.
It also said a number of clarifications will be made to the guideline addressing sound reinsurance practices and procedures.
And changes to regulatory data forms and transaction instructions for legislative approvals related to reinsurance are also being considered.
The paper, available at www.osfi-bsif.gc.ca, notes that many of the proposals are in the early stages of development.
It says comments received will be taken into consideration as OSFI refines the proposals for further consultation, which will occur when draft revised guidelines are released next year.
OSFI said revised transaction instructions regarding approvals for unregistered related party reinsurance will also be released in 2019. Those adjustments to the framework form part of phase two of the review.
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